BPCI-A Total Knee Offers a Unique Opportunity for Market Insights


Sg2 members who attended our most recent Experts Live Q&A: Payment and Policy Update webinar learned that CMS added hospital outpatient total knee arthroplasty to the second cohort for Bundled Payment for Care Improvement—Advanced (BPCI-A). For those providers still undecided on BPCI-A, or even those 16% who took the opt-out and withdrew from the program, Sg2 sees applying for the second cohort as an opportunity not to be overlooked.

Given the market indicators that 1) bundles will be expanding, 2) all roads lead to growth in outpatient services and 3) the total knee addition provides access to never-before-seen data on episode cost, Sg2 strongly recommends taking advantage of this second cohort opportunity to gain insight into both bundles and outpatient knee replacement surgery.

On BPCI Advanced

Before we delve into the impact of the outpatient total knee update, a little about BPCI-A. The program, announced on January 9, 2018, is the evolution of the legacy BPCI program, with one important change being prospective target prices giving organizations insight into benchmarks prior to deciding to participate. This continues CMS’s focus on risk, as they look to models like this to generate savings for the Medicare trust fund. Sg2 has written extensively around BPCI-A, and members can read more in our related Expert Insight and Strategic Countdown.

OP Knee Replacement Changes the Equation

Diminishing returns on internal cost savings and lower patient volumes due to outpatient migration made the BPCI-A program less attractive to health systems and providers, and some have dropped out, opting instead to focus on more lucrative commercial patients. However, as care continues to shift outpatient, and both commercial payers and patients seek out high-value options, outpatient total joint replacement bundles offer health systems and providers a unique strategic positioning tool for cost-effective care with a less-risky population—this is the value play the market is begging for.

Furthermore, risk-averse organizations that opted out or dropped out of the first cohort of BPCI-A—but are seeking opportunities to experiment with virtual rehabilitation, as well as further align with independent surgeons—may find lower-risk outpatient knee replacement procedures a great opportunity to grow overall program volume.

Finally, if you’re hesitant to be first to market with outpatient joint replacement—you’re likely not. Fast-moving payers are adding outpatient joint replacement to ambulatory surgery center lists and bundled payment opportunities in a show of support that these procedures are safe and efficient in the outpatient setting.

It’s Time to Take Action

Organizations can begin the application process in April 2019 for the second cohort to start January 1, 2020, and the time window is short since CMS does not plan to follow with further cohort options in 2021 and 2022.

Step 1: Find a partner to help you navigate episode payment models and apply to BPCI-A. With 25 years of experience, Sg2 is uniquely positioned to help you with strategy and manage your bundled payment program. Our consulting team has extensive expertise in bundled payment program evaluation and implementation, including BPCI-A analytics and proprietary data set benchmarking, customized physician alignment strategy and implementation, program administration and ongoing monitoring/reporting to maximize performance.

As a direct result of partnering with Sg2, organizations have seen…

  • Internal cost savings of 10%–30% with implementation of gainsharing programs
  • Strengthened physician alignment via the gainsharing programs
  • Medicare spend improvement from 5%–20% through reductions in post-acute care utilization and readmissions

Step 2: Apply to gain access to outpatient total knee replacement pricing benchmarks (which haven’t been available previously). This is an opportunity that should not be missed, whether you decide to commit to bundle participation or not. This information can be used to not only understand current market behaviors, but also the rate of shift from inpatient to outpatient surgery for total knee replacement at the market level. As a bonus for applying you will receive historical data and benchmark pricing for all eligible clinical episodes in the BPCI-A program.

Whether you choose to participate in the program or not, the real goal here is finding savings, growth and newfound competencies as you transition to risk. Check out our list of related Sg2 resources below for bundled payment strategies and key steps for go-to-market success, and contact us to connect with our experts for help determining the best bundled payment approach for your organization.

For questions on bundled payment, contact Sg2 Senior Principal Jim Reilly,


Fill out the form below with the pertinent information, and someone from our bundled payment team will reach out to you.

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